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Bakke Cross Examines Grinsteinner

November
16, 2010

Bakke
established that Grinsteinner was accountable to the CEO for administrative
functions like paychecks and to the Board audit committee for audit reports.She said the reason for board oversight is to
ensure the CEO and management cannot have undue influence over the auditor
function.She said that she would take
information that would relate to certain departments back to those departments,
that, for example, if there were an issue she had discovered that was related
to the HR department, she could take it there.Bakke noted that the internal audit charter did not say she could go
back to the department but rather to the CEO or audit committee board
chair.

Bakke
asked if she went into Armstrong's office suspecting fraud.She said not fraud like taking money out of a
cash drawer, but rather misuse of resources, and that after her search she did
have concerns about fraud.She said that
because she had been on a business trip the day after the searach, she did not
have a chance to take her concerns to the board audit chair or the CEO.Bakke pointed out that she was in the office
for 3 days and had an opportunity to reveal that information, but she said she
was still contemplating what steps she should take as she was questioning
whether she was working for an organization where the internal audit function
was broken and whether she should resign.She said that by the time she returned from Las Vegas she no longer thought it necessary
to report the journal to the internal audit chair as it had already been given
to law enforcement.She said she had
given the journal to Long because it seemed to be an HR issue and that he
supervised records retention.She said
it was her judgment as an auditor that it was appropriate to give the journal
to Long.

Bakke
asked whether it was part of Armstrong's duties to route media information to
the employees.Grinsteinner said the
issue was that Armstrong was providing information to Steve Cates and that the
finance department was complaining to her that he wasn't billing Cates for
those requests.She said it was her
responsibility to make sure Armstrong was following the State Auditor
recommendations.Bakke asked whether she
knew that legal would be involved in open records requests, couldn't she have informed
them.She said she could have gone to
the legal department, but she didn't trust them.Bakke asked whether she was aware of
violations of open records requests.She
said you don't know if there are violations until you look, and that she never
got a chance to finish that audit.

As to
whether she had ever received permission from the board audit chair to do the
audit, she said no, that she was charged with following up on the State Auditor
recommendations and that her boss Evan Mandigo was comfortable with her looking
through whatever she needed to.Bakke
asked whether Mandigo told her it was ok to go through Armstrong's office in
the dead of night with a flashlight.She
disagreed with that characterization.She
also said that an independent third party had investigated her search to see
whether she had committed ethics violations, and had concluded Grinsteinner had
done nothing wrong.

She said
that she did want her search to be secret because she was concerned that
records could disappear or be altered.She said she could find something, or she could find nothing, but she
had to look.If she found nothing, it
was better to keep it secret, as there could be no aspersions falsely
cast.She said she could have gone
directly to Armstrong, but then she would have been at his mercy of him giving
her only what he wanted her to see.

Bakke
asked whether Mandigo as audit chair wasn't just talking to Armstrong just in
case the media got involved.She said
that Mandigo took the information to Board Chair Indvik and that it was Indvik
that brought the information back to Armstrong.Bakke asked whether it was improper for the board chair to go to the
communications director regarding something that might hit the media.She said that did not think that was what was
happening.

Bakke
asked about the chain of command and how Grinsteinner had told Long and Peltz
she'd be going into Armstrong's office.She replied, "Say management is involved in fraud, do I take it
through the chain of command? If you believe the board itself is not following
it's charter, there's a different situation in play.The independent audit department has to be
independent.If you have information on
fraud, am I supposed to take that to the board chair when I know that the board
chair is willing to call the CEO and say, 'oh we got a bad report regarding
you, here it is.'"

Bakke
turned to the Institute
of Internal Auditors code
of ethics.Under the heading of
objectivity, Bakke said she was not objective because she found it distasteful
that a Republican right wing newspaper was disseminated to WSI employees.She said that she was objective, but felt
that was not proper conduct within a state agency.

Bakke
asked whether she thought going into Armstrong's desk and taking his personal
items was correct.She replied that what
she took was a business record, and it was her job to do so.

Grinsteinner
testified that BCI's Quinn called her with questions and she did not tell him
about suspicions of illegality even though there was a comment that bothered
her.She was contemplating asking a
private attorney if there were violations of law, but never got a chance
because law enforcement had already been given the journal, and so she felt why
bother at that point.

Bakke
then turned to the code of ethics issue of confidentiality, which meant she was
not to give information to people not authorized to see it.Bakke established she did not get
authorization from the internal audit chair to give the journal to Long, but
she said it was not relevant because she believed it was an HR issue.Bakke established that Grinsteinner had not
read the journal when she handed it to Long and so she had no idea whether it
did involve HR issues.She replied that
Bakke was splitting hairs and that she saw no reason not to give the journal to
Long because she trusted him.

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Sue Wilson tells important stories which move politicians to act. She is the Emmy winning director of the media reform documentary "Broadcast Blues" and editor of SueWilsonReports.com.
Broadcast Blues sets its sights on media policy, and www.SueWilsonReports.com turns a critical eye on the media itself.
She recently formed an activist site, http://www.MediaActionCenter.net